Ryanair's writedown of its 29.8% stake in Aer Lingus cost it more than €200m. Photograph: Martin Keene/PA

Ryanair's daring attempt to buy Irish rival Aer Lingus backfired today as Europe's largest budget carrier reported its first loss in 20 years.

The budget carrier, one of the world's most profitable airlines, was dragged €180.5m (£155m) into the red by a €222.5m writedown of its 29.8% stake in struggling Aer Lingus and further charges related to disposals from its rapidly growing fleet.

Ryanair's outspoken chief executive, Michael O'Leary, launched a second takeover bid for Ireland's flag carrier last year but was rebuffed by the Irish government and trade unions, who together control about 40% of an airline that they are adamant will not be sold to one of the most aggressive operators in the business. The rejection left O'Leary a powerless onlooker as Aer Lingus's performance deteriorated rapidly over the past year.

Despite recording a full-year loss that placed Ryanair in the same bracket as many of its competitors, O'Leary was bullish today about the airline's prospects for the year. British Airways refused to release guidance for the new financial year last month after announcing a pre-tax loss of £401m for 2008, but Ryanair said it planned to at least double post-tax earnings to between €200m and €300m, boosted by a halving of fuel costs for the rest of 2009.

O'Leary said the airline's outlook for this year was "bloody brilliant" and boasted that the carrier will aim to nearly treble its passenger base to 150 million people by 2016. The airline's chief executive also insisted today that it will cost passengers a pound to spend a penny as he confirmed plans to charge for toilets on his aeroplanes within two years.

Passenger numbers keep growing

Ryanair's underlying performance was still profitable once the Aer Lingus foray is stripped out of earnings, but it bore the scars of the recession. The airline made a pre-tax profit of €93.6m for the year to 31 March, a steep fall when compared compared with a profit of €529m for the same period last year, due to a 60% increase in fuel costs. Revenues rose by 8% to €2.9bn, driven by an increase in passenger numbers from 50.9 million to 58.5 million.

Ryanair's competitor easyJet is embroiled in an internicine row about its expansion plans, but the Dublin carrier today reiterated its determination to grow at breakneck speed. It plans to expand its customer base to 67 million this year by cutting average fares by 20%, said O'Leary. The Ryanair chief executive defended a £5 web check-in charge for the six out of 10 Ryanair passengers who have not bought a promotional fare. "I am appalled that you would call it a scam," said O'Leary, who said that the check-in fee was included in the 20% fare reduction.

Ryanair said its €2.3bn cash pile is still rising, in sharp contrast with BA and Aer Lingus which are burning through cash to sustain business models that have a far heavier dependence on expensive long-haul routes.

The budget airline performs better than long-haul operators because it keeps its planes in the air for as long as possible every day and packs the jets with passengers who might not pay much for their tickets but bolster profits by paying for add-ons such as baggage check-in, food and hotel hire. Costs are kept low by buying fuel-efficient aircraft in bulk with aggressive discounts, cutting baggage-handling costs by restricting luggage through hefty check-in charges and flying to lesser-known airports that have cheaper landing fees.

If oil stays below $100 a barrel, Ryanair ensures it meets its target of filling 85% of seats per flight - the level at which it makes a profit - by selling tickets at aggressively low prices.